Glendale council OKs Phoenix Coyotes lease agreement

After a marathon meeting that stretched late into Tuesday night, the Glendale City Council approved a $197 million deal to keep the financially struggling Phoenix Coyotes at the city's arena.

The vote was 5-2, with council members Phil Lieberman and Joyce Clark opposed, citing concerns about the city's finances and a proposed lease termination clause.The council chambers were packed with 300 fans, residents and media. Many fans wore team jerseys and carried signs in support. Residents in opposition made a smaller group.

The prospective team buyer, Chicago businessman Matthew Hulsizer, arrived at the council chambers to applause from the audience and began shaking hands with smiling fans.

Even the National Hockey League's biggest guns, Commissioner Gary Bettman and Deputy Commissioner Bill Daly, showed up for the four-hour meeting.

The deal, under most circumstances, would allow the professional hockey club to remain at Jobing.com Arena for three decades, until 2040.

Clark's main concern, shared by others on the council, including Mayor Elaine Scruggs, centered on part of the agreement that would allow Hulsizer to terminate the arena lease before then if the city failed to meet its financial obligations to the team or faced a lawsuit that invalidated part or all of the deal.

According to the agreement's original language, Hulsizer in that case would still be allowed to keep the money that the city provided through the deal.

The Goldwater Institute, a conservative watchdog, has threatened to sue Glendale if it finds the deal to violate Arizona law.

It was enough for Scruggs and other council members at the meeting, but not Clark, that Hulsizer told the council he was willing to allow 120 days for negotiation with the city if such a default or lawsuit judgment were to occur.

Scruggs said after the meeting that the NHL had told Glendale it would not allow the team to move, even if there was a lawsuit judgment, for seven years.

The agreement also requires Glendale to wire $100 million to Hulsizer quickly, perhaps in the next few weeks, which would help him purchase the team from the NHL for $170 million. The Glendale council approved taking out a loan, known as selling bonds, to pay the money to Hulsizer soon, planning to cover the debt with parking charges, advertising and naming rights near the arena.

In addition, the city will pay Hulsizer $97 million in annual installments ranging from $10 million to $20 million over the next 5 ½ years to manage events at the arena, including games and concerts. After that time, Glendale can renegotiate further payments to Hulsizer for arena management, sell the arena to Hulsizer or find another buyer to purchase the facility. Glendale expects at least some arena-related revenue to help offset that cost.

Hulsizer, in exchange, agreed to maintain the rent and fees other team owners paid to Glendale each year to play at the arena, as much as $6 million per year.

He will also work to rename the team the Arizona Coyotes.

The mayor and city staffers said keeping the Coyotes at Jobing.com Arena is essential to the city's economic future.

"It is not the right way to go to let this team leave the city, leave our arena, leave Westgate City Center and leave us in a position where there's no certainty once again," Scruggs said.

She said losing the Coyotes would deprive the city of $500 million in economic impact over 25 years. And without the team, Glendale would lose a major tenant bringing sales taxes into the city throughout the hockey season.

That money helps to pay the city's debt on the $180 million it spent to build the arena in 2003.

Coyotes fans echoed the arguments.

Deryl Kloster, a snowbird from Edmonton in Canada, said he isn't even a U.S. citizen.

"But what I am is a customer," Kloster said. "I'm ready, willing and able to pay the fee that is required" to keep the Coyotes in Glendale.

Councilman Phil Lieberman and other residents questioned the city's ability to afford the debt included in the deal.

Glendale's deal with Hulsizer brings the city's sports-related debt with interest to more than $1 billion.

Angry Glendale residents echoed his worries.

"It's not about a hockey team, it's about my tax money," said one man. "I can think of a lot of other places we need to spend it in Glendale. . . . It's time for us to cut our losses."

Staffers argued that Glendale has the resources to pay the debt and that the city's investments have made its assets grow as well.

Councilman Steve Frate thanked those who expressed concerns but said he disagreed.

"For those of you that still think this is a terrible, terrible thing for the city of Glendale, we have done our due diligence," he said. "Is there a worst-case scenario? Of course. (But) we've even factored in the worst-case scenario."

Hulsizer told the council he plans to be in the city for a long time.

"If you make a great product, customers will respond," he said. "Hopefully, we'll have a big trophy here called the Stanley Cup."

The NHL's Bettman said league officials are impressed with Hulsizer's preparations to take over the team.

"We believe the Phoenix Coyotes will work in Glendale," Bettman said. And "he (Hulsizer) believes it can work."

The league's final approval of Hulsizer should come shortly after Glendale sells its bonds.

Bettman added later that Glendale will be chosen to host an NHL All Star game sometime in 2012-2014, estimated to bring a $10 million to $30 million economic impact to the area.

Additionally, the city expects to keep the $25 million it guaranteed the league earlier this year for more time to negotiate with a Coyotes buyer. City officials say they may use that money to help pay for the Hulsizer deal.